Few CFOs may have interacted with the AI research labs building the models that will form the basis for GenAI in the enterprise.
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Welcome to the latest edition of the Finance and Accounting Technology Briefing, a biweekly newsletter jointly produced by StrategicCFO360 and The CFO Leadership Council. Our goal is to help finance pros make more confident technology choices and to give software providers a better understanding of their customers’ needs.
A reminder: Our inaugural Finance and Accounting Tech Expo at the Javits Convention Center in New York City on October 29-30 is fast approaching. See the special code at the bottom of this newsletter for a limited-time, free registration.
If you have feedback, ideas or product, people and company news for the Briefing,please email me at vince@CFOlc.com. We look forward to seeing you in October! —Vince Ryan, editor
The Race To Build AI Models
Few CFOs may have interacted with the AI research labs building the models that will form the basis for GenAI in the enterprise. Perhaps some finance chiefs bought a ChatGPT subscription to see what the fuss was all about. But as we noted in a previous issue of this briefing, startups like OpenAI, Anthropic and other AI model developers will be setting the course for AI functionality in finance and accounting systems, not the application vendors themselves.
A CFO could blissfully ignore what's under the hood of a large language model (LLM) or image generator being used by an employee. Still, they should be familiar with the foundational players in this quickly evolving market.
Brendan Burke, an analyst at PitchBook, wrote a recent report that compared foundational AI model developers like OpenAI, Mistral AI and xAI to the internet service providers of the 1990s. He called them the "tech utilities of the future." (The report also covers Anthropic, Cohere and Databricks.)
What's happening among this group of startups vying to lead a possible seismic shift in computing? Which factors determine whether a large language model becomes Google Chrome or one of the many web browsers lost to history?
- Popularity. First-mover OpenAI has the most widely adopted model for the enterprise, according to a Barclays survey of CIOs. But there are plenty of competitors. According to CIOs, Anthropic and Google Gemini are two and three in the adoption race and in open-source Meta's LLamA and Mistral AI lead. For end users, the subscription version of OpenAI's virtual assistant ChatGPT generates significant revenue, while, according to PitchBook, "Anthropic's Claude Pro subscriptions are not scaling" as well.
- Powerful friends. Strategic and financial partners have paved the way for foundational AI models to infiltrate the enterprise. OpenAI's GenAI tools are behind Microsoft's CoPilot, and Apple Intelligence uses the ChatGPT API. Anthropic is the chosen partner of Amazon Web Services and, through AWS, has consulting relationships with Accenture and Deloitte. Mistral AI has IBM and French banks Bpifrance and BNP Paribas in its cap table; Cohere boasts Oracle, McKinsey and Accenture as allies, according to PitchBook. xAI, of course, has founder Elon Musk.
- Physical resources. AI is not just a software problem. The models consume tanker loads of computing power and, in turn, electricity and water. Could hardware limitations determine the winners of the race to the top? OpenAI's latest ChatGPT version was trained in a Microsoft data center with 14,440 NVIDIA H100 graphics processing units (GPUs), and "the company claims to be adding five times that amount every month thus far in 2024," according to PitchBook. Elon Musk's xAI is building a supercomputer in partnership with Oracle, Dell and Supermicro in Memphis, Tennessee. The local utility must invest in grid capacity and build a new kind of water plant to accommodate what Musk calls a "gigafactory of compute."
- Safety and security. Given governments are already developing protective barriers for AI models, safety and security will be integral to success. According to benchmarks, Anthropic outperforms other foundation models "out of the box across safety, privacy, security and integrity," according to PitchBook. (The founders of Anthropic are former OpenAI employees who left to build a safer AI system.) Mistral's Mixtral LLM, on the other hand, "can be easily jailbroken," says PitchBook. In other words, any protective barriers can be slipped and the model made to, for example, execute malicious instructions or have its output unduly influenced by a single user, according to a Microsoft Security definition.
From a purely technological perspective, the success of a foundational AI model will come down to "reasoning capabilities," according to PitchBook, "not the extent of training data nor its performance on question-answering tasks." The end goal? Have AI models respond to circumstances "as an intelligent human would.” But we're a long, long way from that. As the PitchBook report notes, "We're still in the dial-up phase of AI."
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Jim Caci is the CFO of publicly traded AvePoint, a vendor of SaaS solutions for migrating, managing and protecting data in Microsoft 365. We asked him what tools the 2,500-employee company runs in its finance department.
We run NetSuite for accounting, Planful for FP&A, Everstage for commissions and, of course, Microsoft 365, including Copilot for M365 (in pilot phase), and Microsoft's Power BI and Dynamics.
What's your joy, and what's your headache?
With automation and advanced technology, we can take complex and, in some cases, more mundane tasks and make them more efficient and reliable. To see that evolution throughout my career has been exciting and incredibly useful. At the same time, people generally believe businesses are ten steps ahead of where they are technology-wise. AI is excellent, but it is not a silver bullet. While the ROI is there, I believe it will take time.
If you could wave a magic wand, what would you make software companies do for you?
As a software company, we always try to make it easy for customers to use our technology and to get the full value of what they originally paid. The answer to the question, "Did we deliver on the promises we made?" should always be yes. When working with any software vendor, I expect the same.
What's your best piece of tech advice for others in your job?
When making any technology decision, think about the ROI but not just the short-term return. Especially when it comes to AI, the investments you make in getting your organization ready for AI implementation and optimization may be a long-term payback, but they will be worth it.
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Have news to share? Drop me a line at vince@CFOLC.com — Vince Ryan, editor
Runway Finance announced the general availability of its financial planning platform. The launch includes Ambient Intelligence, a suite of capabilities that autogenerates insights and provides context for things like financial drivers and budget variances.
OneStream announced it has filed a registration statement with the SEC for an IPO of Class A common stock on the Nasdaq Global Select Market. Its ticker symbol will be “OS.”
Lattice announced the addition of Lattice Payroll to its HRIS suite through a partnership with Gusto. The solution will include W-4 onboarding, time tracking, employee pay slips and trend reporting.
Bloomberg Tax & Accounting announced integration of its Fixed Assets software with Bloomberg Tax Workpapers to streamline preparation and cleansing of data from complex ERP systems.
Trovata launched a multi-bank API platform for corporate bank accounts that allows finance teams streamlined access to balances, transactions and payment rails through ERPs, treasury systems and bank portals.
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Have news to share? Drop me a line at vince@CFOLC.com — Vince Ryan, editor
Intuit plans to cut about 1,800 employees (10% of its workforce) and close sites in Boise, Idaho, and Edmonton, Canada, incurring about $250 million in charges for the current quarter.
FICO appointed Nikhil Behl as executive vice president for software, leading all technology and go-to-market functions for the analytic company’s software business segment.
LeaseCrunch LLC named a new CEO, chief financial officer and chief product officer. CEO Mark Weidick joins from Onit, a workflow solution provider, and has more than 20 years in technology as a business operator. The lease accounting software provider named Jessica Hamilton, formerly of ActiveProspect and Edgecase, as its new CFO. The new chief product officer is Miguel Perez, formerly with Suralink, Berkadia and Control4.
Digital contracts platform provider Ironclad appointed Michel Feaster, formerly of Qualtrics, to the position of chief product officer. Feaster is the former co-founder of customer journey orchestration company Usermind, which Qualtrics acquired in 2021.
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Stock performance is as of the market close on July 9, 2024
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Plan to join us at the Finance and Accounting Technology Expo, the country’s largest annual trade show for buyers and vendors of corporate finance and accounting software. This year’s event will occur at New York’s Javits Convention Center on October 29-30, 2024. This is an excellent opportunity to network with industry peers, learn from experts and discover new products and services. Register online at StrategicCFO360.com/FATE/register/ and get a limited-time, free registration using the code czh510.
Keynote just announced! Daymond John, founder of FUBU, Shark Tank judge and bestselling author, will bring his unmatched expertise to the stage.
Master’s Guide To Digital Transformation: Your Path To Growth
July 17, 2024 | 3-4 pm EDT | Live, Online
The Continuous Close: A Remedy for Month-End Stress
July 31, 2024 | 1-2 pm EDT | Live, Online
Three Ways to Future Proof Your Tax Compliance Strategy
Aug 7, 2024 | 1-2pm ET | Live, Online
CFO Insights Series: AI & The Modern CFO – Latest Developments
August 8, 2024 1-2 pm EDT | Live, Online
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